NEW YORK — A plunge in a closely watched Treasury yield Wednesday spells relief for some borrowers who want to buy homes and big-ticket items like cars, but is a threat to retirement portfolios and the broader economy.

A vigorous Treasury rally sent the benchmark yield on the 10-year Treasury note below 4 percent early Wednesday for the first time since September, 2005. Heavy losses on global stock exchanges, alongside escalating credit fears and a surge in oil prices above the $99 a barrel level, caused nervous investors to clamor for Treasurys, which carry a government guarantee.

The rally put pressure on yields as prices and yields move in opposite directions.

The benchmark yield is used to set 30-year fixed rate mortgages. Other mortgages and consumer loans for items like autos and appliances often are tied to the yield on the 2-year note, which Wednesday dropped below 3 percent for the first time in almost three years.

“What we are seeing is an overall motion toward lower rates,” said Brian Bethune, U.S. economist at Global Insight. “It may not be as well orchestrated as we would like it to be, but it is happening and it should help some consumers.”

Of course, it must be remembered that housing market conditions are dire in many regions and the ranks of U.S. home buyers are dwindling. In addition, some consumer loans are pegged to London Interbank Offered Rates.

Still, people able to take out new fixed-rate mortgages pegged to the 10-year yield should enjoy lower rates. And owners of current adjustable rate mortgages and loans for other big-ticket items tied to the 2-year notefrom Business 1

yield also should benefit.

The decline in Treasury yields will be good for some small business owners, too. Short-term loans to small businesses often are benchmarked to the 2-year yield.

At the same time, Treasury notes and bonds are a staple of retirement and savings portfolios around the world and weaker yields will translate into less money for many people.

“This is something that really matters to a lot of people and is not abstract,” said Hugh Johnson, chairman of Johnson Illington Advisors. “I manage money for lot of people and institutions and they depend on their returns from their stocks and their bonds.”

The slide in yields also has worrisome implications for the broader economy. Treasurys are prized for their safety, as opposed to the potential to deliver market-beating returns to consumers.

So Treasurys tend to rally when investors are leery of the economy and attuned to threats in other markets. In a sense, an overly boisterous Treasury rally is itself a negative signal for the economy.

"There is a general recognition that we don't need these military-style weapons in New Zealand, so it's very easy to win cross-party support for this," said Mark Mitchell, who was defense minister in the previous, center-right government and who supports the ban initiated by the center-left-led Labour Party.